NEW YORK (AP) – Oil companies have posted record profits in the past few months as Americans struggle to pay for gasoline, food and other basic necessities.,
On Friday, Exxon Mobil posted an unprecedented second quarter profit of $17.85 billion and Chevron posted a record $11.62 billion. Sky-high profits come a day after UK Shell broke its own profit record,
Rising energy prices have shocked consumers and become a political flash point. Last month, President Joe Biden said that “Exxon made more money than God this year. ,
Consumers are not only facing higher fuel prices at the pump, but rising energy prices are being baked into distribution costs, driving up the cost of everything. From apples to toilet paper.
Record profits marked a surprising turnaround from the early days of the COVID-19 pandemic, when cities were shuttered and fuel demand fell. There were many bankruptcies and thousands of layoffs.
The industry has long gone through boom-and-bust cycles. But due to the ongoing war Russia waged a war on Ukraine, resulting in reduced oil and gas in the market from Russia, as well as other global supply constraints, higher prices may linger for some time.
“It’s devastating,” said Mark Wolff, executive director of the National Energy Assistance Directors Association, who said high energy prices hit low-income families and frontline workers hardest. “You live on a tight budget and that’s an extra $40 to $50 per week.”
Wolfe wants the federal government to tax energy companies and “redistribute some of those profits to families who are struggling.”
Inflation is already changing where Americans go and what they eat. It is also changing the way they consume energy.
AAA spokesman Andrew Gross said two-thirds of Americans changed their driving habits and lifestyle, with the vast majority opting to drive less or combine errands. Of those surveyed by AAA, 2% said they had bought an electric vehicle since March, he said.
“They really changed their lifestyle to deal with these high prices,” Gross said.
Exxon, based in Irving, Texas, increased its oil and gas production as crude oil prices were above $100 a barrel. Exxon’s revenue rose to $115.68 billion from $67.74 billion during the same quarter last year.
Natural gas and liquefied natural gas (LNG) prices have also risen due to Russia’s invasion of Ukraine and ensuing sanctions against Russia, a major supplier of natural gas. Many European nations are scrambling for alternatives to Russian natural gas, and are competing for boatloads of LNG, driving up natural gas prices globally and inflation in the US as well as in Europe.Including rising costs for energy.
Rising prices have been a boon to investors, including energy executives, who receive a substantial portion of compensation through company stock. According to analysts surveyed by FactSet, Exxon earned $4.21 per share, which exceeded analyst expectations of $4.02 per share. Chevron earned $5.95 per share, which exceeded analyst expectations of $5.16 per share.
Shares of Exxon Mobil Corp jumped 4% at the opening bell on Friday and Chevron rose 8%
Exxon CEO Darren Woods attributes the company’s success to its investments in oil and gas fields in Guyana and the Permian Basin, as well as its investments in liquefied natural gas, which has been in high demand globally.
“Given the longer investment cycle, increasing supply will not happen overnight,” Woods said in a conference call on Friday.
Gasoline prices rose particularly sharply during the quarter, due to limited global supplies, higher oil costs and fewer refineries operating in the US than before the pandemic.
Exxon plans to increase refining capacity by about 250,000 barrels per day in the first quarter of 2023 by expanding its Beaumont refinery. The company said this represents the industry’s largest single capacity addition in the US since 2012.
To ease Europe’s energy crisis, Exxon sees the potential for fracking and unconventional gas in Germany, and “there is certainly an opportunity where ExxonMobil can play an important role,” Woods said.
Exxon also plans to increase its exports of LNG to Europe. Its LNG export facility under construction in Golden Pass, Port Arthur, Texas, will increase LNG exports from the Gulf Coast by 20% when it begins in 2024, he said.
“Bringing in more LNG supplies to help offset some of the Russian gas going into Europe would be another important step in diversifying supplies for Europe,” Woods said.
Climate scientists and residents living near Gulf Coast LNG export facilities warn that expanding fossil fuel infrastructure could exacerbate climate change disasters,
Exxon expects oil-equivalent production in the Permian Basin to increase by 25% this year compared to 2021, and regular flare-ups in the Permian will end by the end of the year.